HCMP 1890/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1890 OF 2010

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REASONS FOR JUDGMENT

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1.  The 1^st and 2^nd respondents are husband and wife. The petitioner is the wife of the 2^nd respondent’s elder brother.

2.  The petitioner’s section 168A (of the Companies Ordinance, Cap. 32) petition concerns the corporate respondents, the 3^rd to 6^th respondents.  The 3^rd, 4^th and 5^th respondents operated kindergartens and primary schools.  For example, Advance Wise Development Limited (“Advance Wise”) operated a primary school at No. 49 Cumberland Road, Kowloon Tong (“No. 49”).  Wise Apex Enterprises Limited (“Wise Apex”), another primary school at No. 57 Cumberland Road, Kowloon Tong (“No. 57”). 

3.  The petitioner and the 1^st respondent are equal shareholders and only directors of Active Team International Limited (“Active Team”), Advance Wise and Wise Apex.

4.  The 6^th respondent, Richmond Properties and Trading Company Limited (“Richmond”), owned two properties, namely, Nos. 49 and 57.  The petitioner and the 1^st and 2^nd respondents are equal shareholders in Richmond. 

5.  The section 168A petition was successful and various reliefs were granted to the petitioner.  In her judgment dated 14 June 2007 (“2007 Judgment”), Kwan J (as she then was) ordered a valuation of the two properties, and the petitioner to purchase No. 49 and the 1^st and 2^nd respondents to purchase No. 57 at a price to be valued as at 17 September 2004 (the date of the petition).  The properties have been valued respectively at $66,560,000 and $68,222,000.

6.  By para. 10 of Kwan J’s order (“Para. 10”) dated 5 March 2008 (“2008 Order”), the 1^st respondent was ordered to pay interest on the petitioner’s share of the net proceeds arising from the sale of Nos. 49 and 57 with interest to run from 17 September 2004 to 5 March 2008 at the rate of 1% over the prime rate of HSBC and thereafter at judgment rate until payment.  The interest so calculated is approximately $26,200,000. 

7.  On appeal to the Court of Appeal where the 1^st respondent complained that Para. 10 involved double counting/compensation, Para. 10 of the 2008 Order has been amended to read:

“(10) the First Respondent do pay interest on the Petitioner’s share of the distributable profits of Richmond after taking into account the net proceeds arising from the sale of No. 49 and No. 57, Cumberland Road, assuming a sale of such properties from 17 September 2004 with interest to run from 17 September 2004 to the date hereof (5 March 2008) at the rate of 1% over prime rate of HSBC and thereafter at the prevailing judgment rate until payment.”

8.  It is said that the effect of the revised Para. 10, is that “approximately $29.45 million was payable.”

9.  On 26 February 2010, the 1^st and 2^nd respondents were granted leave to appeal to the Court of Final Appeal by an appeal committee on the “or otherwise” limb under section 22(1)(b).  As Chan PJ explained on that occasion the matters in dispute were Para. 10 and the revised Para. 10.  The case for the appellants was filed on 26 April 2010 and for the respondent (petitioner) on 14 June 2010.

10.  This is an application made on 4 October 2010 for the admission of Mr Hildyard QC, to appear on behalf of the petitioner (the respondent in the appeal) in the appeal.  The appeal has been set down for hearing on 7 January 2011.

11.  Mr Jeremy Bartlett, who is also counsel for the petitioner in the appeal, and who appeared on behalf of the applicant, submitted that this appeal involves the determination of principles that might have some substantial impact on Hong Kong jurisprudence.  Such principle being whether under section 168A the court has power to order the payment of quasi-interest.  It is said that the importance of the power to award quasi interest is self-evident. I note also in the affirmation of Fung Chun Bong, a son of the petitioner and himself a barrister, dated 27 October 2010, he said that he had been advised that the issues raised in the Court of Final Appeal, included fundamental issues as to the court’s jurisdiction to award quasi-interest as part of its armory of reliefs in section 168A cases.  It is clear that this is the main foundation for this application.

12.  Mr Bartlett submitted that there are competing Court of Appeal decisions in England on whether the court has jurisdiction to order quasi-interest under the equivalent of our section 168A.

13.  A reading of the judgment of the English Court of Appeal given by Robert Walker LJ (as he then was) in Profinance Trust SA v Gladstone [2002] 1 BCLC 141, which is a clear authority in favour of jurisdiction, shows clearly that it does not conflict with an earlier decision of the English Court of Appeal, namely, Bird Precision Bellows Ltd [1986] 1 Ch 658.  The circumstances in which it may be appropriate to order quasi-interest can be gathered from paras. 29 and 30 of Robert Walker LJ’s judgment.

14.  More importantly, there is nothing in the appellant’s case which could be understood as a challenge to the court’s jurisdiction to order so-called quasi-interest.  The jurisdiction to grant such quasi-interest or interest as proxy was not argued at first instance, nor in this court. 

15.  Mr Bartlett submitted that it has been raised in a back handed sort of way in the appellants’ printed case.  When asked to explain he referred me to para. 24 of the printed case where it is said:

“… there is no sound or legitimate basis for the award of interest, either as ordered by Kwan J or as re-formulated by the Court of Appeal …”

and para. 25 that:

“… it is unjust to make an order for the payment of any interest …”

16.  Mr Bartlett’s argument is forced and I reject it.  No question of jurisdiction was taken in the appellant’s case.  Indeed, there was no reference to or discussion of any authority on jurisdiction in the appellants’ case at all. 

17.  I do not accept that this case involves the determination of any principle which might have any impact on Hong Kong jurisprudence. 

18.  It was also said that the appeal is of unusual difficulty or complexity, for example:

“(i) the extent to which the court should pierce the corporate veil in the context of reviewing reliefs granted under section 168A, in order to subject reliefs to assessment; and

(ii) the extent to which and principles on which an appellate Court should interfere with an isolated item in a global package of reliefs granted under the wide section 168A discretion.”

19.  I will not deal with such arguments in any detail.

20.  If one looks at the judgment of the Court of Appeal, it is clear that the complaint then was of double counting/compensation.  It is true that on appeal to the Court of Final Appeal, the argument has gone beyond mere double counting.  That is because the appellant’s case is that Para. 10, which was revised as a result of their objections, has made matters worse and that the revised Para. 10, when read in conjunction with the Court of Appeal judgment, is:

“… unjust, incomprehensible and unworkable, rendering the Respondents unable to comply therewith … ”

21.  Why that is said to be so is explained in paras. 23 to 25 of the appellant’s case.  I do not know whether these arguments which go to double counting/compensation are good or bad, that is not something I have to decide, but I am satisfied that they are not sufficiently difficult or complex for our present purpose.  What is also clear to me is that the respondent is not complaining or asserting that the court has wrongly pierced the corporate veil. 

22.  Then it is said that the case involves a high degree of difficulty or complexity concerning the inter-relationship of the various reliefs granted by Kwan J as a global package across various orders.  They are said to be 65 inter-connected reliefs which may constitute a record for section 168A proceedings in Hong Kong. I must say I see no real difficulty or complexity here.  Nor is such difficulty or complexity apparent from the petitioner’s printed case.

23.  It is also said that Mr Hildyard had been involved in advising and might indeed be the author of the amended Para. 10.  But the authorities are quite clear that that is not a sufficient reason for admission of overseas counsel. Mr Bartlett submitted that the public interest will not be adversely affected by the admission of Mr Hildyard.  I do not believe that is a sufficient reason for his admission.

24.  Mr Bartlett also relied on the fact that the admission is for a hearing in the Court of Final Appeal.  But, as Ma JA (as he then was) has explained in Re David Pannick QC [2004] 1 HKLRD 950:

“16(4) … where a hearing before the Court of Final Appeal is involved, the court will be more, rather than less, inclined than at any other level to admit overseas counsel. This is provided of course that the matter is one that is substantial and in which overseas counsel is able to contribute significantly by reason of his expertise. …”

25.  Mr Bartlett has compared this appeal with Re Chime Corp Ltd (2004) 7 HKCFAR 546.  With respect, any resemblance is superficial.  Whilst Mr Hildyard’s expertise is accepted, I do not believe this is a case where a high level of expertise is required.

26.  There is also inadequate explanation as to why the application for the admission was made so late.  Delay is a relevant consideration.  Not least because the appellants might wish in response to the admission of Mr Hildyard to instruct specialist counsel too.  I have referred to this in Re Roger Eduard Lound ter Haar Q.C., HCMP 287/2007 (unreported, dated 16 February 2007) as a reason for refusing an admission.  There is little time left before the hearing.  Specialist Counsel are unlikely to be available at such short notice.  So delay and potential prejudice to the other party would have been another reason for refusing the admission.  Nor am I satisfied that the petitioner has made timely or serious effort to explore the possibility of instructing local counsel.  It is said that it is the strongest wish of the petitioner to be represented by Mr Hildyard.  But an application to admit overseas counsel cannot be decided on the basis of the wish of a litigant.

27.  So for the above reasons, which I now give, I have dismissed the application.